There should be no GST on healthcare services: Gautam Khanna
By Gautam Khanna
January 20, 2017. 17:07 IST
Imposition of high GST on medical equipment would affect the overall cost structure of healthcare
The Indian healthcare market is currently worth around $ 100 billion and is expected to grow to $ 280 billion by 2020. The funds allocated to healthcare in the 2016 budget were about 1.5 percent of GDP. According to the World Bank, in 2014 the US spent 8.3 percent of their GDP on public healthcare while Brazil and China spent 3.8 percent and 3.1 percent of their GDP respectively. The global average spending on public healthcare was 5.5 percent of GDP.
Considering the rapid growth of the Indian health sector and our public spending vis-a-vis other countries, we look forward to the upcoming Union budget 2017 and hope that the budget allocation will increase to at least 3 percent of GDP.
Year 2016 witnessed the introduction of several initiatives; however, this sector is in dire need of funds to reach its full potential. More funds need to be allocated for the urban poor and the government should initiate Public Private Programs for tertiary care or specific needs. Today, hospitals are making it their mission to reach remote areas of our country where basic medical facilities are not available. Additional funds would enable more hospitals to invest in the latest medical technology and treatment methods and make them accessible and available to more people at an affordable cost.
Adequate funding and PPPs would also provide the boost to health care organisations thereby providing them with an opportunity to focus on medical innovation and play a synergetic role in advancing healthcare in India.
Demand & supply
Our country faces a serious shortage of doctors and nurses. It is estimated that by 2025 India requires 15 to 20 million new doctors, nurses and healthcare professionals. It is high time that we start working towards meeting this demand in the future. Incentives like concessional land to help set up medical and specialized colleges can help create opportunities for several aspirational individuals. An increase in the budget can help establish the required infrastructure and assist in closing this growing gap.
Proactive vs reactive
There is an increased need for the government to encourage medical organisations to focus on and implement preventive healthcare in addition to disease treatment. Presently, the rural and urban areas are witnessing an astonishing growth of non-communicable diseases (NCDs), especially in the younger population.
India is bearing the dual burden of NCDs as well as communicable diseases. According to the Global Burden of Diseases published in The Lancet in Oct. 2016, cardiovascular diseases and chronic respiratory diseases were the 2 leading causes of deaths in India in 2015 (2.7 million and 1.18 million deaths respectively). An economic loss of $ 6 trillion from NCD’s alone, is expected by 2030. In addition to this, 75 percent of the population doesn’t have a medical insurance and 58 percent of total health spending is out of pocket.
A proper nationwide implementation of preventive care would not only improve the quality of life, but also help the citizens as well as the nation’s economy from huge financial burdens imposed by prolonged treatment of NCDs. Besides prevention of NCDs, there is an urgent need to spread awareness about nutrition, sanitation, institutional birth and immunisation to control and reduce the incidence of chronic diseases among the rural and the urban poor.
Growth and spread of infectious diseases
The Government must also prioritise growing diseases like tuberculosis that are responsible for a large number of deaths in the country. India has the world’s highest burden of TB with 2.8 million cases in 2012 according to WHO. As the disease grows stronger with the number of antibiotic resistant patients, the lack of availability of vital medications is only making the situation worse. To reduce the incidence and death toll caused by the disease, our country needs the support of the Government to secure technologies which will help in diagnosis and provide patients with effective treatment.
There should be no GST on healthcare services provided directly or indirectly with a final purpose of providing healthcare by the hospitals.
Any imposition of high GST on medical equipment would affect the overall cost structure of healthcare. Any increase in GST rate beyond the current tax structure, may dis-incentivize future investments in the private healthcare sector. No exemption is presently available for services offered for aesthetic / beauty enhancement purposes. This leads to disputes as to when can a treatment be called for curing illness or beauty enhancement, especially in areas such as cosmetology, dermatology, dentistry etc. GST needs to provide more clarity and exemptions in certain cases.
Taxes on equipment cost
Tax incentives could be provided to domestic manufacturers of medical devices and thus augment Hon. Prime Minister’s ‘Make in India’ initiative. Currently, the import duty differs in the current classification of medical equipment leading to variations in import duties for similar set of products. There should either be a complete tax rebate on importing these machines or lower the overall tax structure so as to provide quality and affordable healthcare.
Currently, 75 percent of India’s population doesn’t have a health insurance. The major reason for the low penetration of health insurance is that it is currently optional. With the successful launch of schemes like Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana & Pradhan Mantri Jan Dhan Yojana targeting the poor, the government is moving in the right direction. The government can now also explore making health insurance coverage mandatory, starting with the organised sector. Employees could be given the option of either paying their contribution or purchasing insurance from any IRDA regulated insurance company.
With a vast majority of people in our country not being able to access primary healthcare facilities, it is of prime importance that the Government increases its expenditure in digital healthcare. Digital Healthcare can be beneficial in several ways: enabling analysis of an otherwise vast and unorganized healthcare information which could provide better insights for the government and healthcare providers about diseases incidences, treatment and public health; improving communication and accessibility; increasing affordability and raising the quality of healthcare.
Such a move would help in the development of a healthy population, which in turn will help fuel the growth of the Indian economy.